By Theopolis Waters
CHICAGO, June 12 (Reuters) – Chicago Mercantile Exchange CME live cattle futures closed sharply higher on Thursday, pushed up by short-covering in response to higher-than-expected prices for slaughter-ready or cash cattle, traders said.
Cash cattle in Texas and Kansas moved at $148 per hundredweight, up $3 from a week ago, according to feedlot sources. Cattle cash in Nebraska sold at mostly $149 to $150, $3 to $4 higher than last week, they said.
Prices for cash cattle led the way for futures that already were at a discount to last week’s cash results, said Dennis Smith, a broker at Archer Financial Services.
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Fewer animals for sale this week and strong futures prices forced packers to spend more for supplies than expected, traders and analysts said.
Investors periodically bought the August contract and at the same time sold deferred months in a trading strategy known as bullish spreading.
CME live cattle received an added boost from buying in the nearby feeder cattle market.
Consolidation may be on tap for futures on Friday as investors even up positions before the weekend, which may include profit-taking after contracts hit new highs on Thursday, a trader said.
June live cattle ended at 146.000 cents per pound, up 2.975 cents and posted a new contract high of 146.025 in electronic trading. August closed 2.850 cents higher at 145.050, and marked a fresh contract high of 145.200 cents.
CME feeder cattle set a new high in light volume, driven by strong live cattle contracts, fund buying and buy stops.
August finished 2.975 cents per lb. higher at 205.850 cents, and September was up 2.900 cents at 206.525 cents.
HOGS GAIN WITH CASH PRICES
CME hogs landed in positive territory, supported by higher prices for market-ready hogs, traders said.
USDA’s Thursday afternoon average hog price in the Iowa-Minnesota market was up $1.02 per cwt. from Wednesday at $116.66.
Packers bought hogs to top off inventories for this week, while carrying over animals into early next week.
Traders sold the CME hog spot-June contract and bought defered months before the spot month expires on Friday.
Following the June futures expiration, investors will consider whether the July contract is overpriced based on CME’s hog index at 112.46 cents.
Speculators purchased summer and fall contracts with the view the fatal Porcine Epidemic Diarrhea virus will further tighten hog production at that time.
June hogs ended unchanged at 115.975 cents per lb. July closed up 0.900 cent at 125.925, and August at 130.800 cents, 0.850 cent higher.
